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Are Investors Undervaluing TE Connectivity (TEL) Right Now?

Zacks Equity Research
BancorpSouth (BXS) delivered earnings and revenue surprises of 0.00% and -3.66%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is TE Connectivity (TEL). TEL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 15.12, while its industry has an average P/E of 19.02. Over the last 12 months, TEL's Forward P/E has been as high as 16.78 and as low as 12.10, with a median of 14.82.

TEL is also sporting a PEG ratio of 1.41. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TEL's industry currently sports an average PEG of 1.57. Over the past 52 weeks, TEL's PEG has been as high as 1.55 and as low as 1.08, with a median of 1.37.

Finally, we should also recognize that TEL has a P/CF ratio of 8.74. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. TEL's P/CF compares to its industry's average P/CF of 13.25. TEL's P/CF has been as high as 17.73 and as low as 7.02, with a median of 8.62, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that TE Connectivity is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TEL feels like a great value stock at the moment.


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